FDC Ltd Management Discussions.

(A) Industry structure & developments

The Indian Pharmaceutical Market (IPM) grew by 10.3% to reach the market size of Rs. 1,11,135 Crores, during the year ended March 31, 2017. Around 3,297 products were introduced during the year (Source: AIOCD Pharmasofttech AWACS Private Limited- Moving Annual Total Turnover-March 2017).

The Cardiac, Gastrointestinals and Antidiabetics segments have grown significantly and would continue to do so due to changing lifestyles and rising disposable incomes. Whereas, the anti-infectives, the ruling segment in the Industry, has been growing at a lower pace due to antibiotic resistance awareness, banning of fixed dose combinations by the Government and absence of new molecules on the horizon.

Due to various emerging changes in the Industry, it is likely that there would be notable trends in the Healthcare sector such as :

Shift from communicable to lifestyle diseases- With increasing urbanization and problems related to modern-day living in urban settings, currently, about 50 per cent of spending on in-patient beds is for lifestyle diseases; this has increased the demand for specialized care.

Expansion of Tier II & Tier III cities - There is substantial demand for high-quality & specialist healthcare services in Tier-II & Tier-III cities. In order to encourage the Private sector to establish hospitals in these cities, the Government has relaxed the taxes on these hospitals for the First 5 (Five) years.

Emergence of Telemedicine - Telemedicine is a fast-emerging sector in India. It can bridge the rural-urban divide in terms of medical facilities, extending low-cost consultation & diagnosis facilities to the remotest of areas via high-speed internet & telecommunication.

Technological Initiatives (e-Prescriptions) - Digital Health Knowledge Resources, Electronic Medical Record, Mobile Healthcare, Electronic Health Record, Hospital Information System, Technology-enabled care, and Hospital Management Information Systems are some of the technologies gaining wide acceptance in the sector.

(B) Outlook, Risks and Concerns

The year 2016-2017 was full of challenges & chaos in terms of fixed dose combination ban, Price erosion (downward price revisions) for a couple of products, Non supply of codeine based formulations, Impact of demonetisation impact on purchasing behavior and Seasonal impact on acute therapies.

Your Company has undertaken various measures to minimise the risk impact to the best possible extent.

(C) Financial performance and Operations review

During the year under review, your Company registered a Standalone total income of Rs.1,09,566.85 lakhs as against Rs.1,04,986.87 lakhs in the previous year, thereby registering a growth of 4.36%.

The Earnings before interest and depreciation amounted to Rs. 28,571.39 lakhs as against Rs. 29,694.49 lakhs in the previous year. The Net Profit after taxation stood at Rs. 18,706.74 lakhs as against Rs. 16,890.22 lakhs in the previous year.

During the year under review, your Company registered a consolidated total income of Rs.1,10,120.14 lakhs as against Rs.1,05,640.48 lakhs in the previous year, thereby registering a growth of 4.24%.

Your Company has been able to maintain a steady profitable growth, through its increase in operations, cost control measures and a healthy working capital cycle.

(D) Segment wise or product-wise performance

(i) Marketing

FDC as a Corporate is ranked at 26 th position, recording a growth of 3.7% and attaining a market share of 0.89% (Source: AIOCD Pharmasofttech AWACS Private Limited- Moving Annual Total Turnover- March 2017).

Your Companys top brands namely "ELECTRAL" and "ZIFI" continues to feature in the list of Top 300 brands.

During the year under review, your Company has launched various Products in the market such as Ten DC & Ten DCM, Vitcofol Hb, Zocon KZ Shampoo, etc. Your Company has also aligned itself in terms of portfolios & priorities, in order to maintain its finest performance.

(ii) Research and Development

The Research & Development (R & D) Centres located at Jogeshwari & Kandivali (Mumbai), Goa Unit III and Roha (Dist. Raigad) are duly recognised by the Department of Science and Technology. Your Company carries out its various R & D activities in the following areas:


The Research & Development (R & D) centers located at Jogeshwari (Mumbai) and Goa Unit III cater to the design and development of a diverse variety of dosage forms. The laboratories are equipped with state of the art instruments and equipments to enable development of conventional and complex products. A team of dedicated scientists works to develop formulations for various geographical markets viz. India, ROW and the regulated markets of US and Europe. Our R & D centers are also actively involved in capability building and transferring the technical knowhow of novel drug delivery systems at the Plants, accredited by World Regulatory Authorities such as US-FDA, UK-MHRA, Medsafe New Zealand, TGA Australia, PICs Malaysia, and other rest of the world authorities like MCAZ Zimbabwe, PPB Kenya, NDA Uganda, TFDA (Tanzania), etc. Our ANDAs, MAs and our manufacturing Plant accreditions enable us to take care of sizable world exports.


The Research and development centers located at Kandivali (Mumbai) and Roha (Dist. Raigad) are engaged in process development of niche products, particularly in area of Ophthalmic, Antihypertensive, Antifungal and New Chemical entity (NCE). The work on life cycle management of existing drug products is also being carried out with the aim of Cost effectiveness, backward integration and meeting regulatory requirement from drug authorities, which enables to attain accreditation from various World Regulatory Authorities. The other highlights of the process developments of new molecules are Non-infringing processes, Usage of environment friendly chemicals, Development of desired polymorphs, Usage of classical chemistry for development of chiral drugs, etc.

The main highlights of R&D process development are Process development of Bimatoprost, Scale up of Latanoprost process and filling of USDMF, Process development of Polymorph II and III for Flucanazole and commercial batches at plant, achievements in cost reduction of existing drug products, Filling of CEP for Flucanazole, work on New Chemical Entities (NCE) in the area of Antifungal.


During the year, your Company has launched the Enerzal 500 ml in pet bottle as well as 1 Litre in Tetrapak with Orange and Apple flavour.

To extend the product categories of Infant Milk Substitute (IMS), the division is working on development for range of Simyl MCT with some added micro nutrients like Nucleotides, Amino Acids and Omega3,O6 and also has developed MUM MUM 2 as a follow up formula which is under stability study.

Trials and validation of IMS at Sinnar Plant is successfully completed, which completes the commissioning activity at Sinnar Plant. With this, we will be ready to supply current market requirement of IMS with spare capacity, which shall help us in launching new range of products under IMS and complimentary foods for infants.


With regards to recombinant Granulocyte Colony Stimulating Factor, inspection was conducted by Central Drugs Standard Control Organisation (CDSCO) along with Local Food, Drug and Authority (FDA) in consideration to our application to grant No-objection Certificate for manufacturing the clinical grade material. Your Company is undertaking all the necessary actions, for complying with FDA/CDSCO observations.

With reference to your Companys Project on the development of Third Generation Thrombolyte, your Company has obtained the Test License from Local FDA. Downstream processing, Purification and validation trials of the said molecule is being performed at an external party and once the purification strategy is finalized the technology shall be transferred to the Company.

(iii) Exports

Your Companys annual export turnover for the financial year ended March 31, 2017 of API and Finished formulations was Rs 15,576.50 lakhs as compared to Rs. 14,524.60 lakhs for the financial year ended March 31, 2016.

FDC is a fully integrated, research-oriented pharmaceutical company engaged in the manufacturing and marketing of Formulations (Finished Dosage Forms) and Active Pharmaceutical Ingredients (APIs).

Your Company has built a visible presence in the Regulated and Emerging markets. It is striving to place itself on a strong promising path by expanding its business strategically, strengthening its manufacturing facilities and enhancing capabilities across the organization.

Your Company is looking at various opportunities in untapped markets and association with business partners in the global markets to boost its revenues.

The Annual sale of FDC International Limited, a wholly owned subsidiary of FDC Limited, India for the financial year ended March 31, 2017 was GBP 15.00 lakhs as compared to GBP 15.93 lakhs of the previous financial year.

The Annual sale of FDC SA Pty Limited, a Joint Venture Company of FDC Limited, India for the financial year ended March 31, 2017 was ZAR 113.34 lakhs compared to ZAR 59.36 lakhs of the previous financial year.

(E) Internal Financial Controls and their adequacy

Your Company has in place a robust internal financial control commensurate with the size, scale and complexity of its operations. These controls ensure that the transactions are recorded and reported diligently, adhere to the Companys policies & systems, safeguard the assets, prevent and detect the frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information.

Your Company has an internal audit department which carries out audits throughout the year and appropriate actions are taken by the management based on their recommendations.

(F) Human Resources

Your Company strongly believes that our quality process, systems, compliance and business performance are due to the competent Human resources of the organisation. Our Human Resource policies and practices are aligned to meet our business objectives.

Your Company attracts competent professionals, who are committed to deliver exceptional performance and also explores ways for hiring and retaining the best talents. We strive to provide our employees the freedom to excel in their professional and personal goals along with a focus on a healthy work-life balance. We also ensure that our employees are aligned with the organisational culture and values.

The Training & Development initiatives undertaken by the Company help our employees to learn the latest developments, which helps to maximise their potential both individually and collectively as a team, to deliver the business objectives. Your Company would be providing an e-learning platform to the sales employees on Medical and product knowledge in order to facilitate self paced learning through interactive ways.

Your Company believes in healthy cordial industrial relations and has continued to maintain and strengthens it. As on March 31, 2017, there were 5,338 permanent employees, out of which 3,732 employees are engaged in the sales and marketing activities.

(G) Cautionary Statement

Certain statements in respect to Management Discussion and Analysis Report may be forward looking and are stated as required by the applicable laws and regulations. The future results of the Company may be affected by many factors, which could be different from what the Directors envisage in the terms of future performance and outlook.